SIP Calculator: It is amazing the power of compounding that the return doubles after starting investment only 5 years ago. Know how a SIP of Rs 5000 can make your retirement fund worth crores.
Everyone must have read and known about Compound Interest in childhood. When you start managing personal finance after becoming an adult, then the reality of Power of Compounding is revealed. Financial experts say that the benefit of the power of compounding makes sense in the long term. If an investor does SIP for the next 10-15-20 years without withdrawal, he will get proper benefit of compounding.
Double returns are available in Power of Compounding
The investor gets double returns in the power of compounding. One return is received on principal and the other return is received on interest income. Since, the interest portion is not deducted in this, it works to give compound returns. If you want to create wealth for yourself in the long term, then it becomes easy with the help of Power of Compounding.
SIP of Rs 5000 and returns of 12%
If an investor is doing retirement planning and does a SIP of Rs 5000 every month. He is investing in a fund whose average annual return (CAGR) is 12 per cent. How much money he will get on retirement depends on the age at which the retirement planning was done.
A fund of Rs 3.25 crore will be ready
According to SIP Calculator, if the investor plans retirement at the age of 25, then after completion of 60 years, he will have Rs 3.25 crore. If he starts saving for retirement at the age of 30, he will have a total corpus of Rs 1.8 crore. If he would have started it in 35 years, then his fund would be only 95 lakh rupees. It is obvious that the returns received by starting investment only 5 years back almost double. This is possible because of the Power of Compounding.
